Perspective, Scams

Picking a winner.

When you look at a new project in the cryptocurrency space for potential investment, there are many factors to consider before you go all in and get a 2nd mortgage on the house (don’t do that).

Concept

Does the concept behind the project slap you in the face and make you say “Wow!”. I think the most important giveaway for a great project is the wow factor. The idea needs to strike you with its elegance and its ability to solve a real-world issue or use case. If you look in the top 100 coins on¬†https://coinmarketcap.com/ you will see a lot of “solutions” that literally just pick any industry and throw blockchain at it. Yes, blockchain will play a big part in the future of almost every industry but do we really need a Dentacoin (dentist coin)?¬†https://dentacoin.com/ is this an incredible breakthrough?¬†Probably not.

White Paper

The White Paper of a project in the crypto space is essentially a document that lists exactly what the project is trying to achieve. These are normally located on the project’s website and explain all the technical details of how they are going to achieve this task, what new solutions they are proposing and sometimes a time frame. A lot of these documents can be overwhelming in technicality and also¬†can be hard to get through in their length and the crypto mumbo jumbo that goes over most peoples head, but you should push through this¬† and if it still interests you enough to go further then look for the community behind the project to explain in lamens terms what was meant.¬† Reading through the Bitcoin whitepaper¬†https://bitcoin.org/bitcoin.pdf ¬†you will soon see what I mean by complexity. Even though most people do not understand the technicals, you can still grasp the concept and what it’s trying to solve.

Community

The community plays a big part in the crypto space and shows how many people also see the potential that you have discovered. But beware! this is not always a good sign. This industry is brand new and scams pop up and disappear often, taking the investors money with it. A good example of this is the¬† https://en.wikipedia.org/wiki/Bitconnect¬†¬†Bitconnect scam that took a very large amount of investors money and left a lot of people devastated with financial loss. This is where your spidey senses are needed, is there a lot of talk around the project that is negative? If so, can the negativity be justified? Try and play devil’s advocate here and list all the reasons why this could possibly be a bad choice. After doing your due diligence on the project look to see what the community is like. Is the community welcoming? Do the community managers answer questions with gratitude? These are some of the core questions you need to ask yourself and the community before jumping on board. There are a few main platforms that the crypto projects tend to communicate through including Reddit, Telegram, Slack, and Twitter

Development

The progress of development within the GitHub repository can often be a bit overwhelming for the average investor. This can be summed up with slick websites that show nice little graphs that give you an idea of how active the project is, for example,¬†https://coincheckup.com/analysis/github. This is not always an accurate read on the project, with changes being made that are not necessarily positive changes. This is where the confusion of having a large number of changes to a code base that are hacky and thrown together, compared the elegant coder that makes small changes with far greater influence and advancement. And back to the community is where you can figure out what is being worked on and what has been accomplished. A professional looking website with clear goals and points of interest is a great sign, be careful with projects that use a lot of industry keywords without actually getting to the core of the project and what it’s about, this is usually a good sign there is no fundamental use case.

Is this a good time to get in?

Yes, you may have found the ultimate project that ticks all of the boxes but where is the price per coin/token currently?¬† Looking at websites like¬†https://coinmarketcap.com/can give you a great idea in where the price is currently sitting. Almost every project whether good or bad has a huge spike in price that leads others to buy! buy! buy! But this is rarely sustained and almost certainly has a massive pull back to the original lower price. Avoid buying a token or coin on the FOMO stage which means Fear Of Missing Out, where the coin is pumped really high and then dumped on the last buyers getting into the hype. Maybe the coin has been pumped thousands of percent in price, but waiting to get in at a lower price is normally always in the near future. Do not try to play the market, almost every day trader that tries to buy low and sell high for profit barely breaks even unless they have extensive experience in reading the market fluctuations. Your best bet is to spot a project early that has great potential (and the Wow! factor) and buy as low as possible. Sit on the coin and monitor the progression in the background until the price rises naturally from demand as the real world use case comes to light. If your sitting on an investment that will ruin you if it does not succeed, you’ve broken the number one rule. NEVER INVEST MORE THAN YOU CAN AFFORD TO LOSE! These projects can sometimes take years to accomplish even the most basic functionality of the idea, so patience is key. If you feel like the project is losing steam and development has halted, It can be wise to get out, but that is not something you can draw a line in the sand for.

You are your own bank

There are no reverse transactions or a “Head of Blockchain Department” you can go running to if you make a mistake or get hacked from not being wise about your investment. If you are investing over $500 into the scene then you would be wise to purchase a hardware wallet. These are designed to keep your investment safe and is worth every penny that normally stings you $100. There are a couple of lead companies involved in this space which are LedgerNano and Trezor. They provide a safe environment in keeping your crypto keys safe from attack through some clever mechanisms that prevent you from getting hacked or losing your private keys, which are the secret passcodes to access your coins/tokens. These are great devices and are making the mainstream user more confident in safely using cryptocurrency, but be cautious, these are not idiot proof in terms of the user. Yes, YOU! if you send your Bitcoin payment for your shiny new graphics card to the supplier but accidentally use the wrong address those coins are GONE. You are your own gatekeeper and with great power comes great responsibility. Be wise with your new found technology and investments, double check, even triple check every transaction you make. Run updated virus scanners, keep your computer up to date with software installations, run software like MetaCert to prevent getting phished, do not use public computers and never carry large amounts of crypto on a software wallet like Mycellium that is installed on your phone. If you follow these steps and get used to your new found paranoia, your gonna have a good time.

This is where I say: This is just an educational article and should not be taken as financial advice. Do your own due-diligence.

 

 

Scams

FOMO3D

The Ethereum network was created on July 30, 2015. This network created a protocol and platform to create any imaginable software application in a decentralized environment utilizing smart contracts.

Smart contracts are a form of securing a certain routine of events at a very particular time or from a trigger that is programmatically guaranteed. This has incredibly expansive possibilities. One of these smart contracts has blown my mind on what a Ponzi scheme can achieve and openly acknowledging the fact. A Ponzi scheme is a recognized buzzword that brings thoughts of losing money and a small original group that is getting rich from the top of the scheme. Fomo3D takes this to a whole new level with the power of smart contracts in Etherum. The difference in this scenario which is utilizing smart contracts as opposed to a real-world Ponzi, is that there is no owner that can pull the plug when they have made enough money, collapsing the scheme and exit scamming all the late joiners.

The smart contract of Fomo3D at its core is a bucket of digital currency (a single Etherum address) that has no limit to how much it can contain. The idea is to have a countdown timer of 24 hours which is reset every time someone adds more (Ethereum in this case) digital currency to this address. If no one adds more Etherum to the address over the 24 hour period and you are the last one to add funds to the address when the timer hits zero, you get everything inside the address which currently sits above 10 million dollars worth! (21737 Ethereum). There is no question in what the smart contract Fomo3D is or does, as the source code for the contract is publicly visible to everyone, taking the guesswork out of when or if the creator can or will shut down the experiment. The real question is who is going to exit scam publicly first via the intended method (being last to send funds to the pot).

Ponzi

This is profoundly interesting and opens up questions of how far the experiment will go. A lot of discussion throughout the community following Fomo3D is based around this smart contract being the black hole of crypto. Theoretically, this will never be cashed out until all of the Ethereum in existence is inside the contract, as people run out of funds new people will contribute trying to claim the prize and making the pot larger and larger. Once the contract address has a majority amount of Ethereum inside the contract and it is all cashed out to a single person, (the last one to contribute funds before the timer runs out) does the currency still have value if one person owns all of it?

There are dividends based on being an earlier submitter of funds to the contract address which is paid out to the address the funds were sent from. This incentivizes speculators to contribute who are not trying to be the last contributor of Etherum to the contract address and win the whole pot.

You can see a live link to the website below which is hosting the timer countdown in real time.

http://exitscam.me/play